PSS prods governor on rate hike exemption

Ranking Public School System officials have asked Gov. Juan N. Babauta to sign into law the bill that would exempt PSS from the rate increase in Retirement Fund contributions.

In a follow-up letter signed by both Education Commissioner Rita H. Inos and Board of Education chair Roman C. Benavente on Tuesday, both officials asked the governor to sign House Bill 14-369 immediately, to exempt PSS employees from the Fund’s contribution rate increase from 24 percent to 36 percent.

Inos said that, if the bill is vetoed, the PSS will have no alternative but to lay off over 75 teacher aides currently employed at the Head Start and Special Education programs.

She said even federal grants received by the PSS could not accommodate “this huge” unbudgeted increase in the cost of fringe benefits. “The solution is to sign this bill into law immediately,” said the officials.

Both described the rate increase as a “budget buster.”

They cited that the Fund earlier told the Senate that the rate increase is necessary due to the central government’s non-payment of its employer’s share.

“The amount owed has ballooned to over $110 million. If the government cannot pay the employer share at 24 percent, is there reason to believe that it will pay at 36.77 percent?” asked the two.

Both officials agreed that it would be better to have a pension obligation bond instead of increasing the rates. They said the U.S. government has implemented the same for some states and local governments that are delinquent in paying retirement plans.

Inos said a pension obligation bond must be properly crafted, with all the proceeds invested across a five- to 10-year period in a manner that will eliminate the Retirement Fund’s unfunded liabilities and enable the Fund to lower the employer contribution.

“Let’s remember that the PSS has always paid its employer’s share of retirement and insurance,” said the two, adding that it is not reasonable nor fair to require PSS to pay a higher rate to the Fund.

Both officials said the higher rate penalizes PSS instead of rewarding it for being on time in paying its employer’s share.

“We did the same thing that every responsible family does—we lived within our means and paid our bills. Now we are being required to help pay off a debt that we had no hand in creating,” reads part of the letter.

The PSS officials said the rate increase is an extra $4.5 million in the local PSS budget plus the $1.5 million for the federally funded employees. PSS would have to lay off 180 employees from its local account and over 75 employees from federal programs.

“If our Special Education staff are laid off, lawsuits and a loss of over $15 million in federal funds may result,” said Inos.